So Northern Ireland is not having it so bad after all? (Yet).

The two UK regions most heavily reliant on public sector jobs have so far got off lightly – Northern Ireland, down just 1.7 per cent, and Wales, down 2.8 per cent. The fall in north-east and north-west England has been slightly above the UK average of 4.4 per cent.

Actually Scotland seems to be doing okay, with a 1.9% rise in output, over the last three years… Though Alex’s secret sauce will not withstand the cold blast of any further deterioration of the Eurozone (€1 came close to $1.20 yesterday)…

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About Mick Fealty

Mick is founding editor of Slugger. He has written papers on the impacts of the Internet on politics and the wider media and is a regular guest and speaking events across Ireland, the UK and Europe. Twitter: @MickFealty

The housing market’s absolutely knackered though. In the crescent where my house is in Bangor no less than 7 houses are up for sale (out of about 40). For houses of fairly similar size and condition, prices range from £299k to £395, I guess depending on the desperation of the vendors. One of them’s been up since mid 2008 and I’ve watched the price slide year after year, obviously missing the boat each time as the market lurches further downward. These houses started 2008 valued at £400 – £450k.

Output figures are only one measure of economic health: a paralysed/dead housing market tells a story of a society treading on very thin economic ice.

FuturePhysicist

hmm the message seems to be in terms of output, Scotland, Wales, Northern Ireland with their respective anyone but Conservatives governments are reasonably doing well in terms of industrial output, England is struggling, perhaps either due to higher private debt levels or simply bad governance. I think we’ll see a bigger rally in England the Barnett subsidy

Anyone want to speak about the job and or housing markets to see if this “rebalancing”

Old Mortality

Mick I’d suggest that the relaitvely ‘good’ performance of N.I. and Wales is down to the strength of agriculture to which both are more exposed than English regions, as well as the public sector cushion. The same reasoning might apply to Scotland albeit to a lesser degree.

Malairt ‘a paralysed/dead housing market tells a story of a society treading on very thin economic ice’ No, it doesn’t, but it does tell you that when the financially illiterate get sucked in to create a house-price bubble, the aftermath can be very painful because the financially illiterate cannot face up to losses. In London, by contrast, most participants in the housing market are financially sophisticated. There you have people who will sell their family home if they think it has become overpriced and rent until the market corrects itself. Have you ever heard of anybody in N.I. doing that?

ayeYerMa

Indeed, Old Mortality, mailairt’s notion that “a paralysed/dead housing market tells a story of a society treading on very thin economic ice” is absolute nonsense.

Falling house prices is GOOD news. Everyone needs somewhere to live, and when you buy a house it should be bought to LIVE in, not as some “investment”. I found it thoroughly disgusting that the media over the years got into the act of declaring increasing house prices as great news – there is absolutely no way that houses should have become that expensive in the first place.

Reader

ayeYerMa: I found it thoroughly disgusting that the media over the years got into the act of declaring increasing house prices as great news But if we can’t nip into the building society to release another bit of ‘equity’, how can we prop up the economy of China or South Korea by buying the next nice new Shiny? And the next generations can live in hostels until one of them inherits the house – that still has a 100% mortgage on it… And for the irony impaired – no, we didn’t release equity, we paid off the mortgage early instead, and now we are watching our savings get inflated away to oblivion.

malairt

If the housing market is dead it makes it very difficult for people to move if they lose their job or indeed if they get a promotion and want to move to a nicer house or better area. I think the UK is treading on thin economic ice: huge debts, huge deficits year after year, government expenditure around 50% of GDP, unemployment growing and a private sector struggling to borrow for essential investment. The paralysed housing market (outside the South East) is only one consequence of a dire situation.

I wouldn’t agree that it’s only the financial illiterate who bought into the housing bubble of 06 and 07. If you want to buy a house to live in you have to buy at the rate of the time – you don’t have any choice. Well OK you can rent, but that’s not a choice that many want to make, watching serious chunks of money disappearing into someone else’s pocket every month and living in a place with someone else’s choice of kitchen equipment and beige decor. I’m also surprised to see Londoners picked out as financially sophisticated and wonder where that notion comes from. As far as I’ve seen, Londoners are no better or worse than anyone else at deciding at which point in the property cycle we’re at at the moment. The astonishing thing is what people will buy in order to get a foothold in a market that seems to defy gravity.

Falling house prices are only good news if you have no stake in the property market. Otherwise you’re watching your hard earned investment disappearing into thin air, reducing your wealth or even worse submerging you in the morass of negative equity. Everyone does need somewhere to live, I agree, and I think the vast majority are bought as homes, not investments. Although you need someone to invest otherwise there’d be nothing to rent, gumming the market up further.

I’m not sure how you prevent a housing bubble – go back to the late 70’s and early 80’s and ration credit? Bubbles are a feature of the way we function as a society.

The Raven

“Falling house prices is GOOD news. Everyone needs somewhere to live, and when you buy a house it should be bought to LIVE in, not as some “investment”.”

Exactly. I’m in mine, I don’t intentionally plan to sell for a profit, my future isn’t predicated on being tied to it, but it’s a roof over my head and a place to LIVE.

Malairt, you make valid points. But I *still* see no political pressure being put on the banks and lenders to work with people who face difficulty. Granted, no one is made homeless until well down the line of default. But has anyone yet heard of a lender saying “Ok, you got suckered into a £500 repayment like everyone else; you can’t pay it; what *can* you pay? Can you manage £200? Can we work with you until things get better?”

Given the amount of funding we as taxpayers have handed over – and yes, that IS a simplistic and childish way of looking at it – I expect this to happen. I, of course, don’t expect Tory Boy and his friend at No 11 to implement it – they just couldn’t, so deep in the enemy’s pocket are they.

But I do expect to see others – even here, with our weak-as-pish politicians – to be calling for it and exerting the pressure. Supposedly, we’re all in this together.

Reader

The raven: But I *still* see no political pressure being put on the banks and lenders to work with people who face difficulty. Different people face different difficulties. You have mostly concentrated on people who are having problems making their payments. That’s not necessarily a problem with a falling housing market, and unless they have negative equity they can always sell up and rent. The problem *directly* associated with a falling housing market is negative equity, where people owe more than their house is worth. That is merely unpleasant unless they need to sell up and move. If they can sit tight they can eventually pay off the mortgage or wait until rising inflation pushes the price of the house past what they owe. It suits the lenders very well to help people to survive this situation, as that is the only way they will get their money back. But if people are forced to move, that turns a £300,000 mortgage on a £200,000 house into an unsecured loan of £100,000 – disaster. There isn’t really a pot of cash lying around to sort this out, and in the UK people can’t walk away from mortgage debt as the Americans can. One option would be to give a bit of legislative support to people who could actually move by doing house swaps, which would allow people to move house to follow work or family commitments without crystallising their debt.

tuatha

Malairt seems to my reading as someone who bought the tory phantasy of buy at any price – vizmove to a nicer house or better area, ie away from the nasty lumpen who might degrade property values. Willingly, with aforesight or ignorantly with Uriah Heep-like trust, Malairt & its ilk are the cause of their own current distress and can expect little empathy, let alone sympathy, from those who couldn’t/wouldn’t/didn’t buy the schtick of ever expanding economy. I forget by whom but it was well said that anyone who believes (ie puts their hard earned & future weal) into infinite expansion is either a moron or an economist. The only problem with a bus of economists going over a cliff would be empty seats. It’s a mystery to me why they are even fed, never mind paid. R/E agents should be shot on sight.

Old Mortality

Malairt ‘Well OK you can rent, but that’s not a choice that many want to make, watching serious chunks of money disappearing into someone else’s pocket every month and living in a place with someone else’s choice of kitchen equipment and beige decor.’

It sounds as if you subscribe to the utterly witless ‘dead money’ argument which holds that paying more to a mortgage lender than you would pay to rent your dwelling is a wise financial decision. That’s what I mean by financial illiteracy. There are more than a few idiots who, having swallowed the ‘dead money’ argument, now find themselves in negative equity and living next door to people of lesser means who find the rent for such a property quite affordable. Nobody has to buy a house: there is a choice between buying and renting and the former is often the irrational choice. And another thing, you don’t have to own the property you live in. I was for some time both a tenant and a landlord and a very profitable arrangement it was. I even got to live in a bigger house.

No, I don’t see anything wrong with an aspiration to move up, pick whatever your favourite definition of up is. I wouldn’t like to be still living in the 2 up 2 down mid terraced I started off in, thanks.

I think few would agree with the notion of infinite expansion, certainly not in the economic sense. People are ever hopeful though that while the crunch might come it won’t be now – that’s why we have bubbles and why 25% of the adult population still smoke. You’ll never manage to wipe out the eternal optimism of the human race that it won’t happen to me.

I’ve never supported the dead money argument although I can perhaps see how Old Mortality can interpret that from what I’ve said – if you’re paying more money in interest than you are in rent, then I would agree that renting makes more sense. Even I as a humble economist can see that. From what I see of the property market, at the moment renting is more expensive than buying as landlords take advantage of a tight market and tighter mortgage lending conditions and crank up the rate.

We’ve wandered off-topic a tad. I still think that despite the figures quoted by Mick, NI is skating on very thin economic ice: one item of evidence for which is a housing market that is dead and a housing valuations down say 30% or so from their peak.

Old Mortality

‘… if you’re paying more money in interest than you are in rent, then I would agree that renting makes more sense’

The problem is not many people see this and even fewer act upon it. I’m not so familiar with the rental market in Belfast but I’d be surprised if the yields were typically more than 5%. You’re right that NI is skating on thin economic ice but it always has been due to its abject dependency on the state.

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